Stock Analysis on Net
Stock Analysis on Net

Super Micro Computer Inc. (NASDAQ:SMCI)

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Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Super Micro Computer Inc., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 16.96%
01 FCFF0 1,554,512
1 FCFF1 1,729,037 = 1,554,512 × (1 + 11.23%) 1,478,362
2 FCFF2 1,913,227 = 1,729,037 × (1 + 10.65%) 1,398,682
3 FCFF3 2,106,050 = 1,913,227 × (1 + 10.08%) 1,316,429
4 FCFF4 2,306,212 = 2,106,050 × (1 + 9.50%) 1,232,549
5 FCFF5 2,512,152 = 2,306,212 × (1 + 8.93%) 1,147,962
5 Terminal value (TV5) 34,093,116 = 2,512,152 × (1 + 8.93%) ÷ (16.96% – 8.93%) 15,579,309
Intrinsic value of Super Micro Computer Inc. capital 22,153,293
Less: Lines of credit, term loans, and convertible notes (fair value) 5,309,475
Intrinsic value of Super Micro Computer Inc. common stock 16,843,818
 
Intrinsic value of Super Micro Computer Inc. common stock (per share) $28.01
Current share price $26.25

Based on: 10-K (reporting date: 2025-06-30).

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Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Super Micro Computer Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 15,787,235 0.75 22.03%
Lines of credit, term loans, and convertible notes (fair value) 5,309,475 0.25 1.86% = 2.06% × (1 – 9.62%)

Based on: 10-K (reporting date: 2025-06-30).

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 601,418,482 × $26.25
= $15,787,235,152.50

   Lines of credit, term loans, and convertible notes (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (12.90% + 5.20% + 14.70% + 15.70% + 5.80% + 3.40%) ÷ 6
= 9.62%

WACC = 16.96%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Super Micro Computer Inc., PRAT model

Microsoft Excel
Average Jun 30, 2025 Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020
Selected Financial Data (US$ in thousands)
Interest expense 59,573 19,352 10,491 6,413 2,485 2,236
Net income 1,048,854 1,152,666 639,998 285,163 111,865 84,308
 
Effective income tax rate (EITR)1 12.90% 5.20% 14.70% 15.70% 5.80% 3.40%
 
Interest expense, after tax2 51,888 18,346 8,949 5,406 2,341 2,160
Interest expense (after tax) and dividends 51,888 18,346 8,949 5,406 2,341 2,160
 
EBIT(1 – EITR)3 1,100,742 1,171,012 648,947 290,569 114,206 86,468
 
Lines of credit and current portion of term loans 75,060 402,346 170,123 449,146 63,490 23,704
Term loans, non-current 37,415 74,083 120,179 147,618 34,700 5,697
Convertible notes 4,645,178 1,697,716 — — — —
Total Super Micro Computer, Inc. stockholders’ equity 6,301,693 5,417,206 1,972,005 1,425,575 1,096,225 1,065,540
Total capital 11,059,346 7,591,351 2,262,307 2,022,339 1,194,415 1,094,941
Financial Ratios
Retention rate (RR)4 0.95 0.98 0.99 0.98 0.98 0.98
Return on invested capital (ROIC)5 9.95% 15.43% 28.69% 14.37% 9.56% 7.90%
Averages
RR 0.98
ROIC 11.44%
 
FCFF growth rate (g)6 11.23%

Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).

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2025 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 59,573 × (1 – 12.90%)
= 51,888

3 EBIT(1 – EITR) = Net income + Interest expense, after tax
= 1,048,854 + 51,888
= 1,100,742

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [1,100,742 – 51,888] ÷ 1,100,742
= 0.95

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 1,100,742 ÷ 11,059,346
= 9.95%

6 g = RR × ROIC
= 0.98 × 11.44%
= 11.23%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (21,096,710 × 16.96% – 1,554,512) ÷ (21,096,710 + 1,554,512)
= 8.93%

where:

Total capital, fair value0 = current fair value of Super Micro Computer Inc. debt and equity (US$ in thousands)
FCFF0 = the last year Super Micro Computer Inc. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Super Micro Computer Inc. capital

FCFF growth rate (g) forecast

Super Micro Computer Inc., H-model

Microsoft Excel
Year Value gt
1 g1 11.23%
2 g2 10.65%
3 g3 10.08%
4 g4 9.50%
5 and thereafter g5 8.93%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 11.23% + (8.93% – 11.23%) × (2 – 1) ÷ (5 – 1)
= 10.65%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 11.23% + (8.93% – 11.23%) × (3 – 1) ÷ (5 – 1)
= 10.08%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 11.23% + (8.93% – 11.23%) × (4 – 1) ÷ (5 – 1)
= 9.50%